Press Conference by Minister Saito (Excerpt)

*Note: This is a provisional translation for reference purposes only.

8:35 to 8:41 a.m.
Friday, March 22, 2024
In the elevator hall, 2nd floor, the annex to the House of Representatives building

Question-and-Answer Session

End of the BOJ’s negative interest rate policy

Q: The other day, the Bank of Japan (BOJ) decided to end its negative interest rate policy. However, despite the interest rate hike, the yen’s depreciation continued to progress, and in the market, speculation has emerged that there may be additional interest rate hikes by the end of the year due to concerns about inflation. Please tell me what your reaction to the end of the policy is and what you think of the impact on financial institutions’ lending interest rates and company financing.

A: Although the BOJ has revised the monetary policy framework, it expressed anticipation that the accommodative financial conditions will be maintained for the time being. On the other hand, we would like to keep a careful watch on the impact on lending interest rates and company financing and on capital investment without any prejudgment.
Last week, the first round of data collection regarding the spring labor-management wage negotiations showed that a wage increase of 5.28% was offered, marking the first time in 33 years that an increase exceeding 5% has been proposed. The amount of capital investments has reached 100 trillion yen, the largest on record, while the stock price index has stayed above 40,000 yen, also the highest level on record.
As the industrial policy measures implemented in the past several years are beginning to bear fruit, the Japanese economy has come across an opportunity for a significant change. We must not miss this opportunity and let the results be reduced to nothing by relaxing our attention at this time. It is not easy in only two years to change the “shrinking tendency” of leaning toward cost-cutting that has continued for 30 years. We are now entering a critical phase.
Therefore, in order to support the sort of domestic investment that resolves social challenges which will create a future bread-and-butter revenue source, it is necessary to further promote and continue the active industrial policy, including fiscal support. The most important thing to do is enhance predictability for companies by clearly sending out our policy message and implementing concrete policy measures.
There are many fields that are promising for Japan, such as semiconductors, AI, storage batteries, hydrogen, offshore wind power, and biotechnology. By competing and winning in those fields on the world stage, we will be able to open a future for ourselves.
We are now coming to a critical moment in the effort to take advantage of the ongoing sea change to carry out structural changes in the Japanese economy, realize a complete exit from deflation, and shift to a growth-oriented economy, in which investments, wages, and prices all increase. We will make use of all available policy measures to do that.